Airplane Loan Calculator - At AOPA Aviation ("AAF"), we ask "How Many Airplanes Can I Buy?" We have found the answer. The other four questions are: How much money do you have for a down payment? How much can you pay monthly? What is your income ratio (DTI)? And, how do you see the lender?
Before the bank accepts the loan, as well as the monthly loan payments, the borrower must be comfortable knowing that they can cover the projected operating costs of the aircraft. Therefore, all aircraft lenders require the borrower to submit two or more years of financial statements. Checking them helps determine if the borrower's debt-to-income ratio is within acceptable limits. Generally, a good risk ratio is less than 40%.
Airplane Loan Calculator
Banks will then look at the borrower's DTI as well as expected operating expenses, available expenses, historical maintenance data on that airplane make and model. They will contrast this with your ability to handle the estimated additional monthly loan service and expected operating costs.
New & Used Aircraft And Airplane Loans
Contrary to popular belief, one's credit score is not a major determinant of the down payment and loan amortization schedule for aircraft financing. This is actually the loan amount. In general, most aircraft borrowers have very good credit so banks usually divide the down payment/loan amortization period into three distinct categories.
The first category includes loan amounts between $50,000 and $100,000. Borrowers can expect to put 20% down and see 15 years of loan amortization. The second category starts at $100,000. Expect to put down 15% of the asking price and look for a 20-year loan amortization period, best case scenario. The third category starts at about a million dollars where everything can be arranged.
Instead, borrowers may be offered a 15% down payment and a 15-year amortization schedule. Or the bank may offer 20% down on a 20 year schedule. At this level, banks also often apply established rules that can further complicate the issue. Called the thirty year rule, it says, "The age and depreciation of the aircraft shall not exceed thirty years." For example, a ten-year King Air may be eligible for 20-year amortization, while a 15-year King Air may be limited to 15 years (don't expect to get 25 years of amortization on a 5-year-old aircraft, though ).
It is important to talk to professionals like AAF, experts who have extensive knowledge and deep experience with all aviation lenders. We can guide you through rules that aren't always hard and fast.
See Specifications And Images For This Falcon 7x
For example, sometimes the right combination of financial picture and single turboprop can qualify for loans for a longer term. Part of this is that the bank knows that one turboprop owner is setting aside reserves for one engine overhaul instead of two. Part of this is that turbo depreciation curves flatten out faster, resulting in better retained value over time. In contrast, banks are more conservative in offering longer amortization schedules on older jets, sometimes reducing the term to less than the thirty-year rule. Because jets tend to wear out faster than other aircraft. Older jets also require more maintenance, which increases obsolescence.
AAF can discuss some special options for strong credit applicants. For them, a lender may be willing to take less money initially, for example, 10% down with a short amortization (or maybe even 0%). Likewise, if a highly qualified candidate can put 40% down, they can get an interest-only loan – so there's no amortization and tax benefits are maximized.
One thing we always warn and advise is that amortization comes before depreciation. While there are some terms that appear to offer beneficial terms, what we don't want our members to do is reach the end of their term and write a check. That's not good for the lender, that's not good for the market, and it's certainly not good for the buyer because it means you were ill-advised when you bought your airplane.
Great rates. Great terms. Responsive helpful representative. Three good reasons to go to AOPA Aviation when you buy an airplane. If you need a reliable source of financing with people on your side, just call 800.62.PLANE (800.627.5263) or click here to request a quote.
Here's The Average Per Passenger Profit That Airlines Make
Adam Meredith, President of AOPA Aviation Company, is an aviation professional with over 15 years of lending, small business management and customer service experience. Adam is a professional pilot with multi-engine and instrument ratings.
Va loan calculator, home loan qualification calculator, calculator for heloc loan, student loan calculator, business loan calculator, heloc loan calculator, loan calculator home mortgage, airplane calculator, va home loan calculator, airplane loan rates, home equity loan calculator, airplane loan
